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T
Savings and Credit Cooperative Organizations' (Sacco's) are among the fastest growing micro finances in Kenya today. In the year 2012 members’ deposits of
Sacco's in Kenya amounted to approximately Kshs. 378 billion countrywide. The number of Sacco’s had increased to over 19,000 by the year 2012. According to
section 48 (1) of the SACCO Act 2008, a SACCO society shall not invest in non-earning assets or property and equipment in excess of 10% of total assets of which
land and building shall not exceed 5%. This study aimed at investigating the influence of financial literacy on investment decisions of the Sacco funds in Kenya.
The study adopted survey and descriptive research design and targeted all the 34 active Sacco's in Laikipia County. A sample of 14 Sacco's was selected using
random sampling. The respondents were SACCO board of directors. Data was analysed using SPSS and presented through frequency charts, tables and graphs.
Financial literacy was regressed against investment decision and a coefficient of 0.621 was obtained. The results showed that financial literacy is very significant
in influencing investment decision with a p-value of 0.007 at 95% confidence level. The study recommends the board of management in the Sacco’s to train the
board members on testing the feasibility of a venture through analysing the risk and profitability of a venture. Trainings on the importance of cash and fund flows
of an investment before investment are made. There is need for legislations which will allow the Sacco’s to make investments which will serve as alternative
sources of finance for member borrowings.